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Radio Chips Unplugged, Unhugged

The future may see embedded chips used to track goods from manufacturers to distributors to retailers and even to consumers, but that future—at least at the retail level—is still some time off.

In August, Wal-Mart Stores Inc. renewed its request to vendors to tag pallets and cases with radio frequency identification chips beginning in January 2006. Within a three-month period, those plans had been announced, then shelved, then resurrected with a year-later deadline. The flip-flop had little to do with the technology itself.

While the concept of an "Internet of things" has appeal, privacy advocates expressed concern about a future in which nefarious data miners could collect information about the milk in your fridge or track individuals' whereabouts through chips embedded in clothing tags.

Scanning and data collection so far has been sold to consumers as a trade-off for more efficiency and lower prices, says Michael Banks, Ph.D., a customer-relationship marketing consultant in Danville, Calif. "But RFID is not going to be made acceptable through the trade-off argument," he says. "It's an intellectual argument, but concern about privacy is an emotional feeling. You cannot talk people out of the way they feel."

Small retailers, suppliers and consumers alike seem to feel that the RFID movement is "this great behemoth coming at them," he adds.

RFID is being developed by the Auto-ID Center, a consortium of universities and companies based at the Massachusetts Institute of Technology in Cambridge, Mass. The group aims to use RFID to automatically identify individual items, to create "an open global network that can identify anything, anywhere, automatically" and provide companies with "near-perfect supply-chain visibility."

RFID goes into action when manufacturers store an electronic product code on a microchip attached to an antenna. The whole apparatus is about the size of a grain of sand. The code can be read to identify unique items, down to the individual cans in a six-pack of soda, with identifiers such as date of manufacture, place of origin or expiration date. The chip can be embedded within the product itself, on packaging or in cases and pallets. The antenna enables the chip to transmit ID information to a reader, which in turn converts that radio wave into a data stream that can be fed, for instance, into computer programs for inventory tracking.

RFID's advantage over barcodes is that "line of sight" is not required. A scanner needs to see the barcode to read it, but the RFID radio waves can be read as long as they are within the reader's range.

Such technology has been in use since World War II, but only recently have the RFID chips come down in price to less than a dime each, making them cheap enough to deploy widely. Proponents of RFID tracking say it could eliminate human error from data collection, reduce inventories, keep product in stock, reduce loss and waste, and improve product safety and security.

Instead of waiting in line at the checkout stand, shoppers could push their cart through a scanner that adds up everything and automatically charges the total to a credit card. The dairy manager would know that 12 cases of cottage cheese just came in from a particular vendor and 10 cartons of orange juice are approaching their sell-by date. Medication bottles could announce their contents to blind persons.

But critics of item-level RFID say the technology could negatively affect consumers' privacy and even their health. C.A.S.P.I.A.N., or Consumers Against Supermarket Privacy Invasion and Numbering, based in New Hampshire, argues there is nothing preventing companies or the government from using the technology for nefarious purposes—including tracking the products individual consumers buy. They've called for a boycott of Gillette products after it came to light that RFID sensors on Mach 3 razors triggered an anti-shoplifting camera in an English supermarket when the product was removed from the shelf.

In order to keep the consumer backlash at bay, Banks says, RFID proponents need to come clean and admit that significant privacy problems exist, then cooperate with efforts to solve them and pass laws against abuse. The industry must make sure the technology performs in a warehouse setting, Banks says. "Its basic, bedrock value is in inventory control. Let it control inventory."

Before contemplating a consumer rollout, Banks says, the Auto-ID Center must develop a way that the consumer can opt out of RFID tracking. That could be well-labeled, consumer-removable tags, a "kill switch" that deactivates the chips before they leave the store or a way to firewall yourself and your stuff from the readers.